Microsoft has officially confirmed its acquisition of coding repository GitHub for $7.5bn in stock.

The move is breathtakingly strategic as GitHub is at the heart of the coding community globally. The acquisition could encourage more developers to create apps for the Microsoft ecosystem.

‘Microsoft is all-in on open source’– SATYA NADELLA

“The era of the intelligent cloud and intelligent edge is upon us,” said Microsoft CEO Satya Nadella.

“Computing is becoming embedded in the world, with every part of our daily life and work, and every aspect of our society and economy being transformed by digital technology.

“Developers are the builders of this new era, writing the world’s code. And GitHub is their home.”

Speculation about the deal emerged on Sunday with Microsoft officially confirming it yesterday (Monday, 4 June).

So what do we know?

1. GitHub is at the heart of the coding world

GitHub calls itself the world’s largest code host with more than 28m developers using its platform. It was started 10 years ago by Chris Wanstrath.

There are more than 85m repositories hosted on GitHub.

Coders use it to not only store code but also use access control and collaboration features such as bug tracking, feature requests, task management and wikis for every project.

2. It is a big bet on Azure and a full embrace of open source by Microsoft

This is a big coup for Microsoft because it will significantly beef up the company’s cloud business and potentially encourage more developers to use Azure, Microsoft’s cloud business and rival to Amazon Web Services.

According to Nadella, GitHub will operate independently as a community, platform and business, retaining its developer-first values. Developers will continue to be able to use the programming languages, tools and operating systems of their choice for their projects – and will still be able to deploy their code on any cloud and any device.

This is a big change from a decade ago when Microsoft was the flagship of the proprietary technology world and frowned on all things open source.

Under Nadella’s leadership, the open source model is the new mantra. Microsoft itself is one of the most active organisations on GitHub with more than 2m ‘commits’ or updates made to projects.

“Microsoft is all-in on open source,” said Nadella.“We have been on a journey with open source, and today we are active in the open source ecosystem, we contribute to open-source projects, and some of our most vibrant developer tools and frameworks are open source. When it comes to our commitment to open source, judge us by the actions we have taken in the recent past, our actions today and in the future.”

Crucially, Microsoft will become a destination trusted and respected among developers and the go-to location for big enterprises likely to use GitHub as their digital transformation mission control centre.

3. This is Microsoft’s second biggest acquisition

The acquisition of GitHub is Microsoft’s second biggest acquisition after it acquired LinkedIn, the professional social network, for a staggering $26bn in 2016.

Even though LinkedIn operates as an independent company, it is not hard to see the parallels between Microsoft’s CRM capabilities and LinkedIn’s massive Rolodex as a formidable business ecosystem.

In terms of GitHub post-acquisition, Microsoft corporate vice-president Nat Friedman, founder of Xamarin and an open source veteran, will assume the role of GitHub CEO. GitHub’s current CEO, Chris Wanstrath, will become a Microsoft technical fellow, reporting to executive vice-president Scott Guthrie and working on strategic software initiatives.

4. Every business is now a software business

Nadella pointed out that every business in 2018 is quintessentially a software company and developers are at the centre of a massive digital transformation.

“They drive business processes and functions across organisations from customer service and HR to marketing and IT. And the choices these developers make will increasingly determine value creation and growth across every industry.

“GitHub is home for modern developers and the world’s most popular destination for open-source projects and software innovation. The platform hosts a growing network of developers in nearly every country representing more than 1.5m companies across healthcare, manufacturing, technology, financial services, retail and more.”

5. Microsoft may have finally found its M&A mojo

After the disastrous acquisitions of Nokia and Skype – none of which were begun on Nadella’s watch – the acquisition of LinkedIn has been plain sailing by comparison. And so the purchase of GitHub speaks to Nadella’s overall strategic vision for the future of Microsoft and technology, rather than knee-jerk landgrabs that were characteristic of Microsoft a decade ago. This is a move that could go either very well for Microsoft or very badly if developers feel their trust is abused.

GitHub has competition, too. One rival called GitLab claims to have seen a 10-time increase in the amount of developers moving their repositories to its service.

The acquisition of GitHub plays to Nadella’s strategic foresight, but it is going to be a delicate balancing act where Microsoft will have to truly embrace open-source ideals and not be seen to be in any way heavy-handed in encouraging developers to use its other platforms.